Line help: 'Wet blanket'???

In a scene where Mom is worried about Fuzzhead, the Dog, the Old Man and Ralphie begin making jokes about where Fuzzhead is.

The Old Man mentions that "Maybe Fuzzhead went down to the beach with a cousin and then they went and looked for a couple of hot dogs? Hot...dogs!"

Both he and Ralphie laugh.

Mom says, "Well I don't think that's very funny."

The Old Man quickly stops and then mutters, "Wet blanket."

Now what exactly does "wet blanket" mean? Is that some sort of retort that's meant to say that someone doesn't have a sense of humor?

Help!

"How can I move when you've stopped the music?"-me.